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Income and profits from self employment?
#1
If you had a business and needed to pay child and spousal maintenance, would this be paid before or after your business has paid other expenses such as other employee salaries and services?

Eg:
A ltd invoices for 100k a year
Director draws a salary of 30k a year
Remaining 70k is spent on other employee salaries and services

Is cms / spousal maintenance then based on 30k income or 100k?

And what if you needed the business to save some of its money to invest in future growth. Is that possible, or just counted as unallocated earnings and added to your salary as a final deemed income?

Thanks
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#2
(07-17-2018, 10:55 PM)pretzelzzz Wrote: If you had a business and needed to pay child and spousal maintenance, would this be paid before or after your business has paid other expenses such as other employee salaries and services?

Eg:
A ltd invoices for 100k a year
Director draws a salary of 30k a year
Remaining 70k is spent on other employee salaries and services

Is cms / spousal maintenance then based on 30k income or 100k?

And what if you needed the business to save some of its money to invest in future growth. Is that possible, or just counted as unallocated earnings and added to your salary as a final deemed income?

Thanks

It comes down to your trading status. If sole trader, it goes off what your Taxable Income is.
If Partnership or Limited Company, comes down to what percent of it you own.

However, your ex can apply for a variation of the considered income, if there is retained profit in the business.

Note it does not matter what profit is taken out, it comes down to what exists.
Posts made by me are my opinion and any factual information should be checked out. If you do not have a Solicitor, often your local CAB can get you some initial advice.
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#3
That's not my understanding of it, and I have a Ltd. company. CMS is based on your gross taxable earnings, which for me is salary paid from the company (10K) I also pay myself dividends but without my ex applying for a variation order, that is not included in the calculations by default.

It can't be any other way because each company has different expenses, you might invoice £100K but have costs of £80K, so CMS is based against the £20K that you draw.
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#4
I posted this previously 

In terms of Child Support Payments, if the money does not leave the company it is not technically your money, it is the companies money. However because you would be the only director it is a very close relationship you have with the company, it may be deemed, if investigated that any money held as profit in the company could be liable for the calculation on CSA  – each circumstance is treated on its own merits and your dedicated accountant would be able to advise on the best possible course of action.

So depending on the circumstances they can look at both money taken from the company (salary or dividends) or  profit retained 


This  gives  more information 
http://researchbriefings.files.parliamen...P-7773.pdf
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#5
That PDF you linked to is very useful because it contains this:

Quote:- repaying debts from a former relationship of at least £10 per week that were incurred during the relationship, for example repaying a car loan for a car that the parent with care has retained. Only certain loans count, for example from a bank or building society, but credit card repayments do not;
- making payments on a mortgage, loan or insurance policy of at least £10 a week for the home that the non-resident parent and the parent with care used to share, provided the non-resident parent has no legal or ‘equitable’ interest, and the parent with care and the child (or children) continue to reside in the home;

As grounds for the non resident parent to apply for a variation. This is excellent news for me as I was worrying about how to take money out of my company in order to pay off the massive amounts of debt my ex built up and is now my responsibility. Seems that her cunning plan to apply for more money in April 2019 (next return date) is going to backfire massively.
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#6
Mark and others, thanks for your replies. So if you have 10k profit sat doing nothing, is all of it considered your unearned income (if you're sole director) or only part of? Surely some (greater than 2.5k) is worthy to be saved for future business expenses or expansion
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#7
I haven’t seen anything that says a limited companies profiits, not drawn as dividend or salary, can be taken into account. Self employed and partnerships yes. LTD. No.
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#8
Thanks Tamagoto
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#9
(07-18-2018, 08:10 PM)pretzelzzz Wrote: Mark and others, thanks for your replies. So if you have 10k profit sat doing  nothing, is all of it considered your unearned income (if you're sole director) or only part of? Surely some (greater than 2.5k) is worthy to be saved for future business expenses or expansion

Drew, who was a Mod a couple of years back now, said this.

Using 10,000 as an example, if 2 people owned the LTD company.

It could be viewed by an ex partner that the money is being kept in the business, so that a higher rate percentage rate is not paid, or to keep the award down.
On application to vary considered income, then 5,000 would be included.

Should the company spend the money, then you would report at the time a decrease of 25% (if it has taken place), or if not at renew, it would just go of taxable income in the case year if that money no longer existed.
Posts made by me are my opinion and any factual information should be checked out. If you do not have a Solicitor, often your local CAB can get you some initial advice.
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#10
Whats best to do regarding child maintenance is offering a weekly amount you hope your ex accepts. You can then earn what you like and not have to worry about anything. Just got to make sure you offer a fair amount as ex's tend to know approx. what you earn don't they normally .
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